Unit 10 Principles of business strategic planning and development

Answer

1. Unit 10 Principles of business strategic planning and development

   Understand the benefits and process of strategic planning.

   1 Analyse the relationship between ‘strategy’ and ‘tactics’.

   ‘Strategy’ is often defined as a long-term action plan that is geared towards the achievement of set objectives or goals (Katsioloudes, 2012). ‘Tactics’ on the other hand are often described as practical actions that are aimed at the realization of the strategies. A major relationship between strategy and tactics is that ‘strategy’ can be looked at as the mother of ‘tactics.’ This essentially means that whereas strategy is the long-term plan utilized by an organization in a bid to achieve the sought big-picture, ‘tactics’ comprises of the broken down practical ways through which an organization can achieve its set goals. Essentially, ‘tactics’ makes the long-term strategy doable and achievable because of the practicality that underlay the implementation of the ‘tactics.’ For instance, if a nation that is at war with another nation chooses to adopt the strategy of winning the hearts and minds of the civilian population of the opponent, the tactics they can utilize to accomplish this strategy is the use of radio broadcasting to that effect or even the building of hospitals (Katsioloudes, 2012). From this hypothetical example, it is apparent that a business can set up ‘strategies’ before setting up ‘tactics’ because the latter can provide practical modalities of achieving the former.

   2 Analyse the benefits of strategic planning to an organisation.

   Strategic planning can be described as the structured process of envisioning the big picture that is to be developed by an organization and translating the vision into goals and objectives that are broadly defined, as well as, a series of steps that will be taken to ensure the achievement of the set goals and objectives. Strategic planning has several benefits to an organization.

   The first benefit is that it ensures that an organization is proactive rather than reactive (Katsioloudes, 2012). As illustrated above, through strategic planning, an organization is able to determine what its desired future is and to consequently lay out specified long-term and short-term steps that will be taken in order to achieve the big picture.

   Strategic planning also leads to an increase in operational efficiency (Katsioloudes, 2012). Essentially, when there is a clear roadmap that has been set by the organization, it translates to a strong sense of direction. And it leads to efficiency since the individuals within the organization know what needs to be done at different stages.

   Strategic planning also ensures that a business becomes more durable (Steiner, 2010). The concept of business is a very turbulent one. A business may be doing well at one period and then it starts falling into debts at another. Strategic planning minimizes the chances of such fluctuations since every action that is taken by the company is planned and pre-meditated.

   3 Discuss strategic planning as a tool for formulating and implementing business strategy.

   Strategic planning is ideally a tool that is useful for formulating and implementing a business strategy. This is because strategic planning is focused on setting clear priorities for an organization so that the resources of the organization can be used to meet those goals. An organization can effectively draw up a strategic plan by looking into matters like; Mission, Vision, SWOT analysis, PEST analysis, environmental scan, and strategy shift slide (Steiner, 2010). Essentially, strategic planning is an evaluation of the current situation of the company, vis-à-vis the desired outcome, as well as, the process of achieving the desired outcome. Since strategic planning encompasses the latter process of taking steps towards the achievement of the desired outcome, it is apparent that strategic planning partly involves the formulation and implementation of a business strategy.

   4 Evaluate the role of stakeholders in developing organisational strategy.

   The importance of involving stakeholders in the process of organizational strategy cannot be overstated. When stakeholders participate in decision-making, they feel a higher sense of ownership and commitment to the project and this in turn partly affects the success or failure of the said project. Stakeholders are persons or entities that are likely to be affected by the decisions of the organization. Key stakeholders that should be involved in organization planning include; employees, customers, unions, vendors, supply chain partners, as well as, the community members (Svendsen, 1998). Involvement of key stakeholders is also of great importance because when they are excluded, the anticipated benefits will be limited since their contribution is paramount.

   The main role of the stakeholders in developing organizational strategy is to present their unique perspective regarding what needs to be done so that the organization can meet its goals and objectives. For instance, if the organizational strategy is meant to steer the organization away from insolvency, employees can accept a 10% cut on their salaries so that the organization can avoid layoffs.

   Understand the different frameworks and models used in a strategy audit.

   1 Analyse the different techniques used to conduct a strategic analysis of the business environment.

   Different techniques are often used to conduct a strategic analysis of the business environment. One such analysis technique is the environmental scan. Environmental scan entails the gathering of information appertaining to various events, trends, and patterns and their relationship with the organization thereto (Pickett and Pickett, 2003). Environmental scan, for instance, entails the identification of the internal and external stakeholders, as well as, the determination of the type of interest every group has towards the organization.

   Another technique utilized by organizations to analyse the business environment is the SWOT analysis (Pickett and Pickett, 2003). This study entails the identification of the internal, as well as, external Strengths, Weaknesses, Opportunities, and Threats. The effective utilization of this strategy will ensure that an organization effectively carves its sustainable niche in the market.

   Strategic analysis of the business environment is also done through the PESTLE analysis. The acronym stands for Political, Economic, Social, Technological, and Legal factors that may have an influence on the organization. PESTLE analysis is useful in analysing the macro-environmental factors that may have a significant impact on the performance of the organization (Pickett and Pickett, 2003).

   2 Explain how a SWOT analysis is generated from a strategy audit.

   A strategic audit can be descried as an in-depth review that is conducted for the purpose of determining the extent to which the company is meeting its set objectives. It is used to determine the benefits or the demerits of the strategic management modality utilized by the organization (Pickett and Pickett, 2003). Essentially, the strategic audit provides a clear outline of where the company stands at. It not only presents the successes but it also presents the failures.

   As a result of the nature of a strategic audit as illustrated above, SWOT analysis can be generated by making reference to the outlines successes and failures of the strategies utilized by the organization (Pickett and Pickett, 2003). For instance, the Strengths can be determined by analysing the factors that have led to the successes recorded in the strategic audit. Similarly the weaknesses or threats can be analysed by analysing the factors that have led to any losses that may have been accrued by the organization.

   3 Interpret SWOT and PEST analyses in particular contexts.

   SWOT analysis for Wal-Mart

   Strengths

   • It has an established brand name.
   • As a result of the scale of business that Wal-Mart can afford, it is better able to achieve economies of scale; this is what enables it form low prices for the customers.
   • Its information system is technologically advanced.

   Weaknesses

   • It has received numerous lawsuits as a result of its treatment of its customers.
   • It records a high employee turnover rate because of its lack of social responsibility for its workers.
   • Some of the products sold have been reported to be of low quality and this reflects badly on the brand image.

   Opportunities

   • Since there is a current trend towards healthy eating, Wal-Mart has the opportunity of introducing healthy foods.
   • It has the opportunity of expanding its online stores since the demand for online purchases is increasing.

   Threats

   • A major threat facing Wal-Mart relates to increase in competition from other global retailers like Target and Amazon
   • As a result of the recessionary periods, customers still tend to spend less.

   PEST analysis of McDonald’s

   Political Factors Facing the McDonald’s Business

   • As a result of the increase in international trade agreements, McDonald’s has the opportunity of expanding its business.
   • Evolving public health policies can be a threat because people are being encouraged to eat healthy foods. This can also be an opportunity to sell healthier foods

   Economic Factors

   • The slow but continuous growth of developing countries is an opportunity for expansion. This opportunity has been similarly utilized by other brands such as KFC.
   • There has been a slow down with respect to the Chinese economy and this is a threat since it is a major market.

   Social Factors

   • The rising disposable incomes present an opportunity for growth.
   • Healthy lifestyle trend may be a threat, as well as, an opportunity.

   Technological Factors

   • The increase in automation in the business sector presents an opportunity.
   • The increase in online purchases presents an opportunity.

   4 Evaluate the use of Porter’s Five Forces Analysis in strategic analysis.

   The five forces analysis was developed by Michael Porter in 1979. It entails five forces which make up the competitive environment and they include;

   1. Competitive Rivalry

   This entails an evaluation with respect to the number and strength of a business’ competitors. For instance, a company such as McDonald can conduct an evaluation of the number of competitors it has and the quality of the goods and services offered by the competitors.

   1. Supplier power

   This entails an evaluation of the fluidity (or otherwise) of the prices demanded by suppliers. It is also an evaluation of the number of potential suppliers that a business has, as well as, the uniqueness and quality of the goods they offer (Roy, 2011).

   1. Buyer power

   This entails an evaluation of the extent to which the buyers possess the power to drive prices down (Roy, 2011). This is done by, for instance, determining the numbers of buyers and the magnitude of their various orders. It is also done by studying their loyalty and the proximate extent to which they can switch to other products and services.

   1. Threat of substitution

   This entails an evaluation of the likelihood that your customers will devise a different way of having their need for the products or services met without necessarily getting them from the subject matter business.

   1. Threat of new entry

   The position of the business can be compromised if the rate of new entrants is high. This concern is resolved by the evaluation of the modalities that can be incorporated to get a foothold of the business.

   Understand the use of different models in strategy formulation.

   1 Assess how product portfolio analysis supports the formulation of a product strategy.

   Product portfolio analysis is the assemblage of all the products and services that are offered by a company. It provides insights on the growth rate of the company particularly as a result of the said products, market leadership, income contributors, and operational risks (Steiner, 2010). To this effect, product portfolio analysis it provides pointers that will effectively lead to the creation of a formidable roadmap for a product (Steiner, 2010). For instance, in the formulation of a product strategy, there is an apparent need of establishing the particulars that will need to the establishment of a business strategy. These particulars can be adopted from the results of the portfolio analysis.

   2 Analyse different growth strategies in strategy formulation.

   Strategy formulation is the process of selecting the most desired course of action for the purpose of realizing the goals and objectives of the organization (Steiner, 2010). There are various growth strategies in strategy formulation and they include;

   1. Setting the objectives of the organization; strategic formulation is effectively conducted when the long-term and short-term objectives of the organization are determined.
   2. Evaluating the organizational environment; it is important to evaluate the environment that the organization operates in. this can, for instance, be done through the PESTLE analysis.
   • Performance analysis; this entails the evaluation of the past and present performance of the organization vis-à-vis the desired future performance (Steiner, 2010). This evaluation is important because it lays bare the gap that exists between the current realities of the company versus the desired outcome thereto.

   3 Apply strategies for the growth of an organisation in differing contexts.

   A company such as McDonald’s can apply the strategy of evaluating the organizational environment through a PESTLE analysis. This will entail the analysis of the Political, Economic, Social, Technological, and Legal factors that have an effect on the business. This analysis will be helpful since it will assist the organization to come up with modalities of mitigating the threats that will be seen to have arisen.